Chinese investors ask Terra Firma to create sovereign fund pool

The pool would be separate to Tierra Firma's €5.4 billion ($7.2 billion) buyout vehicle, and would allow the private equity firm to continue deploying capital after the investment period of that fund expires next year.

According to The Financial Times, the private equity's firm's founder and chairman, Guy Hands, is looking into the idea of setting up a vehicle which would be worth between €500 million and €1 billion.

Tierra Firma is not due to begin fundraising for its upcoming fourth buyout fund until the second quarter of 2012. That vehicle will have a target of up to €3 billion.

News of this fund pool comes after Lexington Partners pursued a similar strategy with its latest secondary vehicle, Lexington Capital Partners VII LP, which closed in July. The $7 billion fund includes two separate accounts - including one held by China Investment Corporation (CIC) - that will invest alongside the main fund on a pro rata basis.

Brent Nicklas, Lexington's founder and managing partner, told AVCJ in August that two investors' up front commitments meant Lexington had capital on hand to invest while it was still raising the main corpus. "The Citigroup deal [Lexington last year co-led the purchase of $1.1 billion in private equity assets from the bank] would have been difficult to do without these accounts," Nicklas said.

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• Topics
• Greater China
• Fundraising
• Buyout
• China
• Fundraising
• buyout
• Lexington Partners